But during the global financial crisis, Henry attracted less than a handful of economic opponents, led by RMIT’s Sinclair Davidson and Steven Kates and Griffith University’s Tony Makin. To be fair to Henry, his critics have been particularly effective. On an economics blog normally catering to those excited about debating the pros and cons of fractional reserve banking, Catallaxyfiles.com, Davidson bas caught the Treasury misleading the government and the public. Following the delivery of the 2010-11 Budget Papers, Davidson exposed a concocted Treasury graph designed to give political cover to the government regarding the effectiveness of its stimulus package. The graph designed to show a correlation in DECO countries between expansionary fiscal policy and GDP growth during the financial crisis excluded unhelpful countries that didn’t support the Treasury’s thesis.
Armed only with relevant OECD and IMF data, Davidson secured a humiliating climb down from the Treasury as it admitted the inaccuracy and replaced the graph with a new one that excluded data from only four relevant countries. While the Treasury had an explanation for keeping these countries – Greece, Hungary, Iceland and lreland – out of the data set, the most likely reason is that because when they are included, the Australian Treasury’s standards start to resemble that of Greece in managing its debt levels.
Not that dodgy graphs are the only legacy of Henry’s tenure. During the debate to make Australia a world leader in ritual suicide through the introduction of an emissions trading scheme, Henry’s Treasury modelled its economic impact to back up the government’s agenda. But an analysis by former ANU academic Alex Robson found that the Treasury’s conclusions required the reader to believe in Santa Claus and the Easter Bunny. Robson found that in supporting the government’s policy, the Treasury didn’t model the actual design of the government’s emissions trading scheme but relied on ‘unrealistic but crucial assumptions’.
The assumptions? That an international climate change agreement that wasn’t delivered in Copenhagen will be implemented. That every other country in the world will adopt an equivalent emissions trading scheme. That mitigation technologies that barely exist would be diffused and widely used.
Even by political standards these aren’t assumptions. They’re a fairytale wishlist. Henry may not be personally responsible in all cases. But they have all occurred on his watch. And in his own review into Australia’s Future Tax System, Henry was caught red-handed misleading Australians by using an out-of-date academic paper by PhD candidate Kevin Markle and his professor to claim resource companies are only paying a tax rate of about 17 per cent.
Like fractional reserve banking isn’t the greatest moral challenge of our times.
More seriously, criticism like that has got to hurt.